White Knight Associates would like to explain that business premises renovation allowances is intended to encourage companies or individuals to bring qualifying business premises, whether freehold or let, back into business use.
Working with Portal Tax Claims, WKA found that business premises renovation allowances provide a 100% initial allowance in the year the expenditure is incurred, or if it is preferred by the taxpayer, 25% per annum on a straight line basis. They are particularly valuable because all expenditure incurred qualifies, unlike commercial.
The Finance Act 2005 introduced a scheme enabling people or companies, who own or lease property that has been vacant for a year or more in designated disadvantaged areas of the UK, to claim full tax relief on their capital spending on the conversion or renovation of the property, in order to bring it back into business use. After protracted negotiations with the EU, implementation eventually took take place on 11 April 2007.
Expenditure must be incurred on the conversion, renovation, or incidental repairs of a ‘qualifying building’ into a ‘qualifying business premises’. WK Associates found the relief is not available for extensions (except to provide access to qualifying business premises), moveable plant and machinery, or property previously used, or to be used for certain trade sectors:
Qualifying Expenditure
It was found that the qualifying expenditure is capital expenditure on
- converting a qualifying building into qualifying business premises,
- the renovation of a qualifying building that is, or is to be, qualifying business premises, and
- repairs to a qualifying building.
We believe the following is not qualifying expenditure. Expenditure on:
- acquiring land,
- extending a qualifying building, or
- developing land next to a qualifying building.
For example, adding another storey to a qualifying building or creating a basement for a qualifying building is not qualifying expenditure.
Qualifying Building
A qualifying building is an unused commercial building or structure or part of an unused commercial building or structure. The building must have been unused for a year immediately before the conversion or renovation began. This means that it must not have been used for anything for a year before conversion begins. The last use must not have been as a dwelling.
Source: PTC
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